A Rising Wedge With A Wolfeeee???

I don’t have anything new to write about Nifty today other than what I have already written for the last two days. We still maintain the status quo. Just out of curiosity I am posting below the hourly chart of Nifty with a different perspective. We have a pair of HH and HL in place. If we break the HL (4503), one can take short position with a stop above 4580. Other wise the following chart is a study in Price Pattern. We have a rising wedge coupled with a bearish Wolfe Wave. The target of this WW is near about 4070! This of course is only possible if Price pierces through our supports of 4370 and 4250 like hot knife through butter!!! Nay I aint screaming Short but just presenting a view…..an alternate view!

Nifty Recap For The Day!!!

Nifty opened strong courtesy overnight bullishness in Dow and then of course strong cues from the Asian bourses. Today was profit booking day, like I have been commenting earlier time to take some money off the table. Very choppy intraday action, as one can see on the 5 min chart on the left. The hourly chart on the right has a new HH in place. Nothing much to comment today, the daily chart below shows a shooting star. Profit taking? Exhaustion perhaps! Interestingly Nifty has just closed in the vicinity of the long term sloping trend line. 4450/70 needs to be tested to cement further the up move and the oft repeated 4370 plays the pivotal role.

"It's choice - not chance - that determines your destiny."

Jean Nidetch

Hmmm the choice …… use STOPS!!!!

4370 Holds!!! Nifty Recap For The Day!!!

In my last two posts I have been saying 4370 is pivotal for the bulls to hold. Yesterday’s intraday action saw us forming a DB there and taking support. Today also we tested 4370 levels and took off! The chart on the left is a 5 min chart. Look at the congestion (shaded area) with it multiple tops. This was a short scalp trade only meant for nimble fingers. Once the support at 4370 was cemented, Nifty just took out these multiple tops along with the Stops placed there. There was a positive divergence in MACD Histogram; this was followed by a break in the trend line along with the break of the 20 period EMA. Once the congestion was taken out 4440 was a mere formality. The Hourly on the right also shows we have broken out of a triangle. The logical target of this move should be in the vicinity of 4725. But like I had mentioned in my Sundays post 4550/4647/ 4727 is likely to be the road map.

The chart above is the daily chart. We have kissed the sloping trend line from January highs. We are way above our 20 and 50 period MA’s which now are likely to provide support. Again I reiterate ADX is suggesting time to book profits and let the consolidation happen. Anybody who was long with Stops below 4370 can now trail with 4440 (conservative) or 4470 (aggressive).

"You cannot discover new oceans unless you have the courage to lose sight of the shore."

Origin Unknown

Nifty Recap For The Day!!!

Volatility marked today’s move. With no strong cues from the Asian markets we were a bit fickle minded ourselves too. The chart above on the left encapsules the intra day action on the 5 minute time frame. A cautious opening, and a failure to attain new highs. We made a DT (plus we had an ascending triangle which failed) and finally broke the rising trend line along with the 20 period EMA. This signal was corroborated by the negative divergence in the MACD lines and also noticeable was when the price made the first attempt at conquering the top the MACD Histogram had barely moved above the zero line signifying the bulls were just not strong enough. As I had mentioned in my post yesterday 4370 is important, well we made our double bottom there (a very good opportunity for trading). The hourly chart on the right has formed a triangle. A breakout of 4440 and 4350 (btw 4360/65 has both the trend line support and also that of the 20 period EMA) signals the next direction of Nifty, as indicated by the arrows. Above 4440 we have 4500 and 4550 to take care of. A break below 4350 would signal a retest of 4250.

The chart below is the daily chart. Off late with so many lines drawn on it, this looks a bit smudged. But no other choice as one needs to keep these clusters of trend lines for future reference. On the daily also, one can see a small symmetrical triangle. The problem with these triangles is that they are very notorious in their behaviour. You just never know which way it’s going to break till it breaks actually. Another thing noticeable is that the ADX is going quiet. My guess, maybe its time to consolidate for sometime.

"The greatest mistake you can make in life is continually fearing that you'll make one."

Elbert Hubbard

Weekend Views On Nifty!!!

I am back, the break did me good! The problems with breaks are that you get a bit lazy to get back to work hence such a late post. Let’s view the charts of Nifty and see what’s in store for us next week. First we take on the weekly chart above. We have closed above the 38.2% retracement of point A to B. Any close below 4375 on weekly closing basis will mark the end of this pullback. On the other hand we have overhead resistance at 4550 levels, which is the 50% fib ratio plus along with the trend line resistance. This area is also the logical target of inverse H&S (shown below on the hourly charts), will discuss that later. Above 4550 we have 4647/4727 to take on.

Now let’s move to a timeframe lower; the daily chart shown below. In fact both the charts shown below are daily charts. The one on the left is just simple chart showing pivots. We have a HH and a HL. In simple terms this just means that the trend in question remains up if it takes out the previous HH and it will reverse if it takes out the recent HL. The chart on the right shows we have just closed below the trend line resistance but more importantly above the 50 period Moving Average. Just above this we have a cluster of horizontal resistances at 4450/70 and finally the 4500+ which will be a bone of contention between the bulls and the bears. Since that marks the penetration of the huge sloping trend line drawn from the January highs.

Finally we have come to the hourly chart and the inverse H&S I had mentioned earlier. The two vertical yellow lines marked are nothing but a way to show how the basic target of inverse H&S is computed. Though the logical target for this pattern on the hourly chart remains near 4550 we still have to face resistance near the trend line which incidentally falls at 4480 and 4500 (A round number resistance!). My view is that we are innocent till proven guilty! As long as we trade above 4370 we remain firmly in uptrend, below 4370 the all important 4250 comes into force!!!

Another important thing I wish to mention that this pullback has many a people announcing that we are back in BLACK. I just want to say one thing first put a question to yourself and ask “Are we really in a BEAR market?” If YES then you can’t just wish it away in 6 months. These vicious pullbacks are synonymous with Bear markets and should be used for quick swing trades. Another most important thing is to build your portfolio slowly by buying little into the FALLEN ANGELS, a term used by Elder to describe good shares with strong fundamentals, which have fallen out of favor and are now available REAL cheap.

"Dream as if you'll live forever. Live as if you'll die today."

James Dean